Students of investing look for a formula. Many students read both technical works and the retrospective testimonies of high-performing investors.
1. The technical approaches: A few good books have been written. But reported technical investment approaches rarely, if ever, lead to consistent, high-level returns.
2. The investment memoirs: They tend to be long on philosophy and short on advice for how to buy particular securities.
Thus, in both areas, the students are largely disappointed.
Investment memoirs of successful investment practitioners
However, as the works of successful investment practitioners, the memoirs do have much to recommend them. They describe non-specifically, investment approaches that worked in practice. They capture an important aspect of investment success: that it depends more on character than on mathematical or technical ability. This is the consistent message of investment memoirs of a group of successful investment practitioners.
The problem is that each memoir presents a unique perspective on the character traits necessary for investment success. Different authors emphasize different characteristics:
- coolness in a crisis,
- wide-ranging curiosity,
- diligence in pursuit of information,
- independent thought, broad qualitative as opposed to detailed quantitative understanding,
- a proper appreciation of risk and uncertainty,
- a long time horizon,
- intellectual rigour and balance in analysis,
- a willingness to live outside the herd, and
- the ability to maintain a consistently critical perspective.
Unfortunately, an investor with all these qualities is a rare bird indeed.